Tuesday, March 28, 2017

House Committee Hearing Examines SIFI Designation Process

Hears Testimony on FSOC's "Inconsistent and Arbitrary" SIFI Designation Process

Author: David Schwartz

The House Oversight and Investigations Subcommittee held a hearing on Tuesday, March 28, 2017  to examine the process used by the Financial Stability Oversight Council (FSOC) to designate systemically important financial institutions (SIFIs). The subcommittee heard testimony from a panel of witnesses about the designation process and about the House Financial Services Committee’s February 28, 2017 report criticizing the FSOC and what it termed its “inconsistent and arbitrary” SIFI designation process. 

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Wednesday, March 22, 2017

SIFMA Asks G-20 for More Regulatory Balance

Global policymakers should strike the right balance between growth and stability

Author: David Schwartz

In a March 15, 2017 letter, SIFMA urged Treasury Secretary Steven Mnuchin to take a leading role in the G-20 to reassess existing regulatory reforms and strike the appropriate balance between growth and stability. While acknowledging that regulatory reforms since the financial crisis have made markets more stable, SIFMA believes that too much emphasis on stability may be unnecessarily impeding growth. The letter asks the Treasury Secretary to engage the G-20 members to reexamine existing regulations and create an improved cross-border financial regulatory consultative process.  SIFMA believes that such an effort would “foster economic growth and vibrant financial markets...(and) make regulation efficient, effective and appropriately tailored.”  SIFMA said that the U.S. is in a position to lead the G20 in an endeavor like the E.U.’s 2015 “Call for Evidence”[1] and encouraged Secretary Mnuchin to do so.   

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Tuesday, March 21, 2017

G-20 Renews Its Commitment to Basel III

Will also keep an eye out for unintended adverse consequences.

Author: David Schwartz

 

“We reiterate our commitment to support the timely, full and consistent implementation and finalisation of the agreed G20 financial sector reform agenda."

 

In a statement issued following a two-day meeting in Baden-Baden, finance chiefs of the Group of 20 nations renewed their pledge to finalize the Basel III overhaul of global banking standards. The G-20 urged the Basel Committee on Banking Supervision (BIS) to finalize the Basel III reforms “without further significantly increasing overall capital requirements” from those previously proposed. 

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Sunday, March 19, 2017

Basel Issues Step-In Risk Consultation Sequel

Author: David Schwartz

On March 15, 2017 the Basel Committee on Banking Supervision published a second consultation paper on guidelines for the identification and management of step-in risk. The first consultation on the topic in December of 2015 set out a framework for identifying and managing step-in risk – the risk that a bank might support unconsolidated entities, beyond any contractual obligation, to protect itself from any reputational damage arising from its connection to such entities. This second consultation takes into consideration comments received on the first proposal, includes proposed reporting and other templates to regulators, and offers a timetable for adoption of the framework. 

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Thursday, March 16, 2017

OFR Publishes Trio of Central Clearing Studies

Author: David Schwartz

Over the past few weeks, the U.S. Office of Financial Research (OFR) has published a trio of papers looking at various aspects of central counterparties (CCPs). These papers range from the best way to stress test CCPs, to the adequacy of CCP margin requirements and the relative risks and utility of central clearing to repo markets.

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